Small investors are not putting enough in stocks.Even those who do, don't remain invested for long. According to AMFI data, nearly 46% of the investments by small investors in equity funds are redeemed within two years. Out of this, more than 27% gets redeemed within a year. Most investors treat equity investments as short-term gambits, not as avenues of wealth creation.

Do you also share this short-term perspective of equity investments?

You may have to lament it later. Small investors often lose their nerve when markets tumble. But serious money can be made by investing in stocks during a market downturn. In November 2008, during the global financial meltdown, you could have bought TCS shares at a throwaway price of `418 apiece. After the 1:1 bonus in 2009, that one share is now worth almost `5,000 (annualized return of 40%). In March 2009, HDFC Bank shares were trading at `850. After the 1:5 stock split in 2011, the annualized return is 32.3%.

To pocket such fantastic gains, the average investor needs to change his perspective. If you are in your 30s, a bear market presents a golden opportunity to make money. Bull markets can make you happy, but bear markets can make you wealthy. We back-tested for the past 10 years and found that mutual fund investors who stopped their SIPs during bearish phases made less money than those who continued investing throughout the 10-year period. Stopping an SIP when markets are down defeats the very purpose of the SIP.